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Funa vs. MECO& COA

The COA argued that the MECO is not subject to its audit jurisdiction because MECO is not a GOCC or government instrumentality. Petitioner claimed MECO has the characteristics of a GOCC based on EO 292. The Court ruled that while MECO is a non-stock corporation, it is not government-owned, as the government does not own over 51% of its capital stock. Therefore, MECO is a non-governmental entity and not a GOCC. However, the accounts pertaining to verification and consular fees are subject to COA audit as those fees pertain to governmental functions.

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JEANDEE FEI LEONOR
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226 views2 pages

Funa vs. MECO& COA

The COA argued that the MECO is not subject to its audit jurisdiction because MECO is not a GOCC or government instrumentality. Petitioner claimed MECO has the characteristics of a GOCC based on EO 292. The Court ruled that while MECO is a non-stock corporation, it is not government-owned, as the government does not own over 51% of its capital stock. Therefore, MECO is a non-governmental entity and not a GOCC. However, the accounts pertaining to verification and consular fees are subject to COA audit as those fees pertain to governmental functions.

Uploaded by

JEANDEE FEI LEONOR
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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[G.R. No. 193462. February 4, 2014.

]
DENNIS A.B. FUNA, petitioner,
vs.
MANILA ECONOMIC AND CULTURAL OFFICE and the COMMISSION ON AUDIT, respondents.

Facts:
Petitioner Funa, sent a letter to COA, requesting the latest audited financial report of respondent MECO,
invoking that it is his constitutional right to information on matters of public concern, on the belief that
MECO Is a GOCC, and within the jurisdiction of COA.

COA revealed that MECO is not among the agencies that they need to audit in the CG Sector.

Petitioner then learned about this and he filed a petition for mandamus, he filed it in his capacity as
taxpayer, concerned citizen, a member of the Phil. BAR and author. Petitioner posits that in failing to
audit MECO, COA neglected its duty under Sec. 2 (1), Article IX of the 1987 Constitution to audit GOCC or
government instrumentality. He claims that the MECO is a GOCC without an original charter or, at least,
a government instrumentality, the funds of which partake the nature of public funds.

He further asserts that MECO possesses all the essential characteristics of a GOCC and an
instrumentality under the Executive Order No. (EO) 292, s. 1987 or the Administrative Code: it is a non-
stock corporation vested with governmental functions relating to public needs; it is controlled by the
government thru a board of directors appointed by the President of the Philippine and while not
integrated within the executive departmental framework, it is nonetheless under the operational and
policy supervision of the DTI.

MECO denies that it is a GOCC or a government instrumentality. That it is not owned or controlled by
the government and its funds are private funds. The President of the Philippines does not appoint its
BOD and the desire letter is just recommendatory and not binding on the Corporation.

COA argues that petitioner lacks locus standi to bring the suit and that he violated the doctrine of
hierarchy of courts and that the instant petition already became moot.

Issue:
Whether or not MECO is a GOCC or a government instrumentality and therefore under the jurisdiction
of COA.

Ruling:
The Court ruled that MECO is a non-governmental entity, it is a non-stock corporation, however the
accounts pertaining to the verification fees and consular fees are subject to the audit jurisdiction of the
COA. These fees pertain to government and should be audited by the COA.

NOT A GOVERNMENTAL ENTITY


Government instrumentalities are agencies of the national government that, by reason of some "special
function or jurisdiction" they perform or exercise, are allotted "operational autonomy" and are "not
integrated within the department framework.

The Administrative Code defines a GOCC:


(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-
stock corporation, vested with functions relating to public needs whether governmental or proprietary
in nature, and owned by the Government directly or through its instrumentalities either wholly, or,
where applicable as in the case of stock corporations, to the extent of at least fifty-one (51) per cent of
its capital stock

By definition, three attributes thus make an entity a GOCC: first, its organization as stock or non-stock
corporation; second, the public character of its function; and third, government ownership over the
same. Possession of all three attributes is necessary to deem an entity a GOCC. There is not much
dispute that the MECO possesses the first and second attributes. It is the third attribute, which the
MECO lacks.

IT IS A NON-STOCK CORPORATION
The organization of the MECO as a non-stock corporation cannot at all be denied. Records disclose that
the MECO was incorporated as a non-stock corporation under the Corporation Code on 16 December
1977.

The purposes for which the MECO was organized are somewhat analogous to those of a trade, business
or industry chamber, but only on a much larger scale i.e., instead of furthering the interests of a
particular line of business or industry within a local sphere, the MECO seeks to promote the general
interests of the Filipino people in a foreign land. It is not disputed that none of the income derived by
the MECO is distributable as dividends to any of its members, directors or officers. Thus, it is organized
as a non-stock corporation.

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